Lessee's Right to Free Water, Oil and Gas

Landowners should pay close attention to any provisions in a lease providing free water, oil or gas to the producer for operations. Particularly in areas where water is scarce, certain limitations should be placed on these rights. The following suggestions may be helpful.

Decide whether free water, oil or gas privileges will be granted to the lessee. If so, stipulate whether the substances may be used for operations conducted both on and off the leased premises. (These provisions may be incorporated into the royalty clause.)

Do not allow the lessee to take water from wells, tanks, ponds or reservoirs.

If recovery measures are undertaken by the lessee involving floodwater operations, deny the use of potable water. State that such water must come from non-fresh sources.

If water is to be purchased, state how the market price will be determined.